Long-sought defense cuts hurt economic growth

Army Secretary John McHugh, left, and Army Chief of Staff Gen. Ray Odierno, arrive on Capitol Hill in Washington, Tuesday, April 23, 2013, to testify before the Senate Armed Services Committee hearing on the Defense Department budget requests for fiscal year 2014. (AP Photo/J. Scott Applewhite)

WASHINGTON — Liberals are increasingly facing a conundrum as the Pentagon experiences the deepest cuts in a generation: The significant reductions in military spending that they have long sought are also taking a huge bite out of economic growth.

Liberal lawmakers and others on the left have argued for years that the military budget is bloated and should be dramatically scaled back. At the same time, they have been major advocates of government spending to help drive economic growth and create jobs.

Fresh data on the state of the economy on Friday showed that the two goals are coming into conflict. The economy grew a only 2.5 percent in the first quarter, in large part because of a sharp 11.5 percent drop in military spending, and that came on top of an even bigger 22.1 percent plunge in military spending at the end of last year.

“It makes me feel torn,” said Rep. Keith Ellison, D-Minn., chairman of the Congressional Progressive Caucus. “The bottom line is military spending is government spending, and in the absence of any sort of other stimulus for the private sector, we need to get it where we can.”

The pattern of military cuts is expected to continue over the coming months. The United States is intensifying its withdrawal from Afghanistan and has exited Iraq. And a pair of budget measures — including budget caps put in place in 2011 and the reductions known as sequestration — are forcing the military to sharply cut back.

The shrinking Pentagon budget also raises tough questions for liberals about the role of the military as a source of employment. At a time when the country is struggling to keep good-paying manufacturing jobs from going overseas, weapons systems and armored vehicles must be made in the United States, creating jobs at home.

Shrinking the military means more veterans looking for work, and the government has struggled to place recent veterans in private-sector jobs. The unemployment rate for veterans of Iraq and Afghanistan is 11.8 percent, compared with 8 percent for veterans overall, and President Barack Obama is preparing another major push Tuesday to help with veteran employment.

The internal tensions among liberals over military spending cuts echo debates among some conservatives, who want to maintain or expand defense spending but struggle to explain how to do that at the same time they wish to substantially cut the federal budget.

Gordon Adams, a professor of international relations at American University and a former national security official in the Bill Clinton administration, said the conflicts are explained by basic politics — and have been present during every major military drawdown since World War II.

“In either party, there’s going to be a tension for the members between wanting to cut defense and wanting to save jobs in their district,” Adams said. “We’re in one of those big 20-year cycles where the budget goes up with a combat and then comes down. It always brings these politics to the surface.”

Liberals say they feel deeply divided. They welcome the fact that the military — after so many years of growth — is adjusting to tighter spending controls. But they acknowledge that the cuts are happening at the worst possible time, when the economy is already growing slowly and could use a lift from the government.

“I don’t want to see anybody lose their jobs,” said Sen. Bernard Sanders, Vt., an independent who caucuses with Democrats. “We are in the midst of a terrible recession. When you cut military spending you lose jobs, and that’s a terrible thing.”

On the other hand, Sanders said, military spending should not be preserved just because it keeps people employed. “You can hire millions of people digging ditches and hire millions of people to fill the ditches,” he said.

The money should be redirected toward better sources of employment, he said, such as investing in construction projects that benefit the economy — building roads and bridges, for example — or education.

Former congressman Barney Frank, D-Mass., one of the loudest advocates of sharp military reductions over the years, argued against making immediate and dramatic cuts to military spending. But he said there will still be a positive lesson.

“This is the wrong time to be making government cuts to any form of expenditures,” Frank said. But, he added, “the fact that we’re doing the reductions now in military spending will have zero negative impact on American security.”

While pained by the consequences for the economy, several liberal lawmakers defended the cuts, especially given that other non-military programs are facing the ax in an age of austerity.

“When you look at what sequester’s done to Head Start and unemployment benefits, this is a very terrible period,” said Rep. Barbara Lee (D-Calif.). “Defense can handle an across-the-board cut. Head Start cannot handle that.”

Military spending is rapidly become a less significant share of the overall economy. As a percentage of gross domestic product, defense spending started picking up after the attacks of Sept. 11, 2001, rising from 3.8 percent and peaking at 5.3 percent in the fall of last year.

In the first three months of this year, military spending made up only 4.8 percent of the size of the economy, and that is likely to decline more.

The drawdown in Iraq and Afghanistan will mean hundreds of billions of dollars less in defense spending over the next decade. The Budget Control Act of 2011 caps defense spending at low levels, and then the sequester trims hundreds of billions of dollars more.

The Congressional Budget Office estimates that military spending, aside from mandatory expenditures to pay for health care and pensions, will fall from 16 percent of the federal budget in 2014 to 12 percent in 2023.

The prospect of deep defense cuts has stirred debate among Democrats for several years. The Simpson-Bowles commission suggested deep reductions in military spending, but the Obama administration rejected the panel’s recommendations in part because of the heavy hand it took with the Pentagon.

Rep. Rush Holt, D-N.J., said sequestration is forcing the Pentagon and defense hawks to realize that the nation can do just fine with less spending.

“I’m pleased that there does seem to be, because of the sequester, a growing consensus that there is waste and ineffectiveness in the Defense Department,” he said.

Jared Bernstein, a senior fellow with the left-leaning Center on Budget and Policy Priorities, said that though military spending has some unique economic benefits, it also has drawbacks.

“It definitely has political protection. Every time someone mentions a defense cut a member of Congress talks about protecting factory jobs in their district,” he said. “But relative to other government spending, a considerable chunk of the military is spent outside our borders. In that sense, the multiplier is smaller there than in other forms of government spending.”